Why COI Tracking Is Essential for Your Retail Business
The retail industry has no shortage of risks. Between shoplifting, inventory damage, supply chain issues, customer injuries, data breaches, and competition, retail businesses face countless threats that could harm their bottom lines or even force them to shutter their doors. While third-party liability may not be at the front of your mind, it can be devastating for retail businesses that don’t take the proper precautions.
Requiring appropriate insurance coverage and tracking certificates of insurance (COIs) are mission-critical for retail businesses looking to manage their third-party risks. We’ll tell you what you should know.
Sources of Third-Party Risk in Retail
Any third party with whom you work can expose you to risk. While your retail business likely uses carefully crafted contracts as a layer of protection, these requirements are insufficient if you’re not conducting thorough reviews to confirm continued compliance. Manufacturers, suppliers, subcontractors, and vendors can bring with them unforeseen problems.
Manufacturers & Suppliers
Defective products can lead to costly claims, especially if those defects result in injury or death. As a retailer, you control what goes onto your store shelves, but you don’t have full access to the design and manufacturing processes. Therefore, these claims should fall primarily on the manufacturer or supplier. However, if you work with uninsured companies, the injured party may be more likely to come after you.
Retail businesses typically work with external vendors to provide certain services. If these vendors do not hold necessary insurance policies and an incident occurs, it can leave a retailer in hot water. One notable example is credit card processing companies. Credit card breaches are always a nightmare for retailers, but imagine how much worse it could be if your processing company doesn’t have proper insurance coverage.
Whether you bring in subcontractors to repair your building, run wiring to a different area, or deep clean the facility, any subcontractor without proper coverage could expose your retail establishment to risk, such as damage to your property or physical harm to your employees or customers.
Complicating Factors for COI Tracking in the Retail Industry
Increasing Use of Subcontractors
More and more retail businesses rely on subcontractors to fill their needs. Not only must each business maintain valid, up-to-date COIs for existing subcontractors, but they must also collect them for every new subcontractor they bring on. This leads to a growing need for efficient COI tracking.
In the retail industry, the need for services varies seasonally. For instance, retail businesses may rely on customer service subcontractors to fill temporary roles around the holidays and construction subcontractors to make building and parking lot repairs during the summer months. This inconsistent demand also leads to fluctuations in the number of COIs staff must process, which can make planning difficult.
Retailers are subject to regulatory requirements, and the wrong subcontractor or vendor could jeopardize a company’s compliance. Payment Card Industry Data Security Standard (PCI DSS) and System and Organization Controls 2 (SOC 2) are some of the most common sets of standards impacting retail businesses. However, depending on the nature of the business, HIPAA, GDPR, and other standards could also apply.
Trust bcs: Your Partner in Mitigating Your Retail Company’s Third-Party Risk
With a state-of-the-art platform and expert team, bcs is on the cutting edge of COI tracking for businesses. The self-service solution gives your team the onboarding, reporting, and automation features they need to save time and simplify the COI tracking process. The full-service solution also adds experienced compliance analysts to act as an extension of your team in collecting, reviewing, and correcting compliance documents.
Don’t let your retail business get caught off guard by a costly claim. Contact bcs today to discuss your best option for effective COI tracking.
Learn from the pros about risk-mitigation, document tracking, and more, with expert articles from bcs.